Analysis of Structural System-Level Competitiveness in the ...
Canada competitiveness - 2015 analysis
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Canada Competitiveness Analysis
By: Paul Young, CPA, CGA
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Agenda
• Trade• Hydro Rates• Labor Rates• Productivity• Commodity Prices• Taxation Policies• Government Programs – R&D
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Trade
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Canada Trade/investment deals
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Canada Trade/investment deals
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Canada and Trade
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Liberal Party / NDP comments -
• Ralph Goodale –
• Don Davies
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Trade Analysis
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Trade Analysis - Imports
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Trade Imbalance
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What does Canada Export?
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What does Canada import
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Where are the largest imbalances/Product
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Conclusion
• How do you reduced the trade balances– Trade/Investment deals (i.e. fair deals)– Investment in advance manufacturing/green
technology/food/forestry products– Continue to develop natural resources like
uranium, lithium, nickel, oil, gas, vanadium, iron/ore, agriculture sector
– Reduce internal trade barriers (i.e. East/West Pipeline)
– Port/pipeline capacity
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Overiew• This slide deck will look at different factors that can impact on Canada’s competitiveness.
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Power Generation
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Large Customer comparison
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Hydro Rates
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R&D
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R&D
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R&D
• SDTC -
http://www.sdtc.ca/index.php?mact=News,cntnt01,detail,0&cntnt01articleid=333&cntnt01origid=341&cntnt01detailtemplate=news-details&cntnt01returnid=143&hl=en_CA
• Next Generation of Fuels - http://www.nrcan.gc.ca/energy/alternative-fuels/programs/3643• R&D Program
http://www.kpmg.com/ca/en/services/tax/r-d-incentives-and-services/pages/canada.aspx• CME -
http://www.parl.gc.ca/Content/HOC/Committee/412/FINA/WebDoc/WD6615327/412_FINA_PBC2014_Briefs%5CCanadianManufacturersAndExporters-e.pdf
• http://www.researchinfosource.com/pdf/2013Top100List.pdf• http://www.conferenceboard.ca/press/newsrelease/14-03-26/canada_s_pharmaceutical_sector_c
ould_get_r_d_boost_from_free_trade_agreement_with_europe.aspx
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R&D• http://www.canadapharma.org/News.asp?a=view&id=96• http://www.plant.ca/general/canada-remains-competitive-business-tax-environment-worldwide-kp
mg-infographic-137272/• http://www.pwc.com/en_CA/ca/energy-utilities/publications/pwc-technology-oil-sands-report-2013
-11-en.pdf• http://www.workingforest.com/canadian-forest-products-research-and-innovation-receives-global-
recognition/• Advanced MFG - http://www.feddevontario.gc.ca/eic/site/723.nsf/eng/01547.html or
http://news.gc.ca/web/article-en.do?nid=984479 or http://cme-mec.ca/_uploads/_media/52fqtx4b9.pdf
• Tesla - http://www.cbc.ca/news/canada/nova-scotia/tesla-announces-5-year-lithium-ion-research-deal-with-dalhousie-1.3117126
• Harper and IBM - http://www.theglobeandmail.com/news/politics/ottawa-reveals-details-of-15-billion-fund-for-science-strategy/article21957502/
• Canada’s Ranking - http://www.newswire.ca/news-releases/canada-moves-up-in-innovation-rankings-but-weaknesses-remain-524047021.html
• • There is more improvement required to continue to help move ideas from incubation to markets.• Government Programs -
http://www.slideshare.net/paulyoungcga/federal-government-programs-canada
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Canada Productivity
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Canada Infrastructure
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Tax Competitiveness
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Policy Proposals
• Royalty review• Provincial Corporate Tax Increases• ORPP• Carbon Taxation
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Labor Costs
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Labor Costs
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Commodity Prices
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Capital Investment
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Canada Capital Spending
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FDI/Canada
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Government Polices - Overall
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CME/Comments
• Key quotes:
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Key Drivers/Manufacturing• This is a good article discussing the impact on currency rates as part of the production costs/cycle: http://research.cibcwm.com/economic_public/download/feature3.pdf. The issue I see with this
article is that it does not deal with growth in cost areas as part of the production cost management cycle:• Hydro rates are ignored, but should have been included due to fact how much hydro rates have increased in terms of their overall growth:
http://www.electricity.ca/media/Electricity101/Electricity101.pdf or http://www.exchangemagazine.com/morningpost/2014/week18/Monday/paying-more-for-power.pdf or business pleas for reduction in hydro rates: http://www.thestar.com/business/2014/02/26/ontarios_big_industries_plead_for_lower_hydro_rates.html . In theory the dollar would help, but if dollar is change is slower than hydro costs increase then any savings will be lost over time. Here is latest from Ontario Chamber of Commerce: http://www.theglobeandmail.com/news/national/skyrocketing-electricity-rates-wreaking-havoc-with-ontario-businesses/article25348882/
• Labor Rates – Labor rates benefit the most as they typically do not grow that fast in terms on the dollar depreciation and/or appreciation: https://www.kpmg.com/Ca/en/IssuesAndInsights/ArticlesPublications/Documents/2014-compalt-execsum-fc-en.pdf or https://www.bcgperspectives.com/Images/The_Shifting_Economics_of_Global_Manufacturing_Aug_2014.pdf/. USA healthcare costs are increasing as such that helps Canadian companies: http://www.themanufacturinginstitute.org/Research/Facts-About-Manufacturing/Costs/Structural-Costs/~/media/48CE1E3848B446ADAFEBF9E945D26FC8.ashx.
• Advance manufacturing - http://www.cbc.ca/news/canada/windsor/pm-stephen-harper-announces-tax-rules-that-allow-manufacturers-to-write-off-equipment-1.3074117 or http://www.prnewswire.com/news-releases/2015-top-technologies-in-advanced-manufacturing-and-automation-technical-insights-300092861.html or http://www.logisticslist.com/self-driving-truck.html
• Raw Material – Raw Material will be impacted when the Canadian dollar as many raw materials, like oil/Gas, nickel, copper, etc. are reflected in USD. A weakening Canada dollar will force up the cost of raw materials
• Capital Investment – B of C had hoped that during the high Canadian dollars would have had companies investing in capital, but that did not happen due to fact the economy had slowed as such capacity was not required during 2008-2009. http://www.cme-mec.ca/english/advocacy/your-issues/manufacturing-competitiveness.html. The recent depreciation in the CDN$ will have impact on company’s ability to purchase capital assets, especially if the equipment is purchased outside of Canada: http://www.cbj.ca/the_canadian-chamber_of_commerce_-_2014-15_economic_outlook/
• R&D Innovation – Canada http://www.conferenceboard.ca/hcp/details/innovation/berd.aspx. Canadian government have only increase investment in R&D by about 2% over the past few years. Innovation is a key area that requires more a commitment, especially as it has impact on productivity as well as the ability of companies to stay competitive with their products/services
• Exports – Exports are very sensitive to currency as such they likely will benefit with higher volume, especially to the USA: http://www.edc.ca/EN/Knowledge-Centre/Economic-Analysis-and-Research/Documents/export-indicator-report.pdf. Exports have been growing at 4-5% range for the past few years. Trade/investment deals with countries like China, South Korea, Colombia, CETA, etc. will have a benefit over time: http://www.slideshare.net/paulyoungcga/key-market-and-industry-indicators-for-canada-december-2014.
• Automotive Production - http://www.theglobeandmail.com/report-on-business/international-business/toyota-moves-corolla-to-mexico-highlighting-high-costs-in-canada/article23963034/ • Infrastructure – Ontario Liberal talk about Transit, but little on port expansion and/or other supply chain management issues related to infrastructure, why?
http://pm.gc.ca/eng/news/2014/11/24/pm-announces-new-infrastructure-investments-across-canada. So, does this mean Sousa will lay out a plan to move forward the east-west pipeline or help with other flows of goods?
• Internal Trade Barriers – Will work with the provinces to bring barriers down? http://www.slideshare.net/paulyoungcga/internal-trade-canada• Partnering with Ottawa to take advantage of federal programs - http://www.slideshare.net/paulyoungcga/federal-government-programs-canada • Oil and Gas Sector and Ontario - http://www.albertaoilmagazine.com/2012/07/ontario-manufacturers-retool-to-take-advantage-of-a-prairie-energy-boom/ •
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Canadian Manufacturing
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Near-Shoring
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Supply Chain Trends for 2016
By: Paul Young, CPA, CGA
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Technology Driven
• Big Data– Turning data into answers for business on the
fly• Agility to adjust to Consumers
– Keeping customers loyal • Social Analytics
– Understanding social media trends and translating those results into product innovation
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Sustainable, Flexible and Transparent Supply chains
• Continue movement to clean business practices through the reduction of the carbon footprint
• Continue disclosure via sustainability reporting as it relates to business practices
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De-Centralization – Omni Channels
• eCommerce in Canada will continue to grow to reach 20% of all retail sales by 2019– Re-look at distribution and fulfilment centers
are part managing customer orders– More electronic tracking as part of fulfilment
via computer chips to align with smart devices like iPads, iPhones or other modes of communication – (real time Inventory Tracking
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Near-shoring
• Companies are moving production closer to their customer base– Issues facing Near-shoring in Canada
• Labor rates• Hydro Rates• Logistics (roads, bridges, rail, ports, etc)
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Collaborative relationships
• Integration of technology through out the supply chain. – Advances with Mobile devices/smart
technology has allow for better integration of operations.